The conventional wisdom in the literature on aid allocation suggests that donors utilize bilateral aid as a tool to buy influence in the aid‐receiving country. Those who conclude that aid is driven by donor self‐interest focus on government‐to‐government aid transfers. However, this approach overlooks important variation in delivery tactics: Bilateral donors frequently provide aid to nonstate actors. This paper argues that donors resort to delivery tactics that increase the likelihood of aid achieving its intended outcome. In poorly governed recipient countries, donors bypass recipient governments and deliver more aid through nonstate actors, all else equal. In recipient countries with higher governance quality, donors engage the government and give more aid through the government‐to‐government channel. Using OLS and Probit regressions, I find empirical support for this argument. Understanding the determinants of donor delivery tactics has important implications for assessing aid effectiveness.

Over the past two decades, donors increasingly link foreign aid to democracy objectives in Africa. This study investigates whether and how foreign aid influences specific outcomes associated with democratic transition and consolidation. Using an instrumental variables approach for the period from 1989 to 2008, we show that economic aid increases the likelihood of transition to multiparty politics, while democracy aid furthers democratic consolidation by reducing the incidence of multiparty failure and electoral misconduct. However, we find little evidence that either economic or democracy aid influences opposition support in multiparty elections. These findings have implications for understanding how donors allocate aid and the political consequences of foreign assistance in Africa.

Foreign aid donors try to make themselves visible as the funders of development projects in order to improve citizen attitudes abroad. Do target populations receive these political communications in the intended fashion, and do they succeed in changing attitudes? Despite the widespread use of the practice, there exists little evidence about the effectiveness of this strategy. We embed an informational experiment about a U.S.-funded health project in a nationwide survey in Bangladesh. Although we find limited recognition of the USAID brand, explicit information about U.S. funding slightly improves general perceptions of the United States. It does not, however, change respondent's opinions on substantive foreign policy issues. We also find, contrary to existing arguments that foreign aid undermines domestic government legitimacy, that the information increases confidence in local authorities. These results strengthen our understanding of the efficacy of promoting donor visibility and shed light on an important debate in the area of governance that assesses the effect of external actors on government legitimacy.

In response to corruption and inefficient state institutions in recipient countries some foreign aid donors decrease bilateral government-to-government aid flows and increase the share of bilateral aid by outsourcing delivery to non-state development actors. Other donor governments continue to support state management of aid despite corruption and inefficiency, seeking to strengthen recipient states. These cross-donor differences can be attributed in large measure to different national orientations about the appropriate role of the state in public service delivery. Countries that place a high premium on market-efficiency (e.g. US, UK, Sweden) will outsource aid delivery in poorly governed recipient countries to improve the likelihood that aid reaches the intended beneficiaries of services. In contrast, states whose own political economies emphasize a strong state in service provision (e.g. France, Germany, Japan) continue to support state provision. This argument is borne out by a variety of tests, including statistical analysis of dyadic time-series cross-section aid allocation data and individual-level survey data on a crossnational sample of senior foreign aid officials. To understand different aid policies, one needs to understand the political economies of donors.

Branding of foreign aid may undermine government legitimacy in developing countries when citizens see social services being provided by external actors. We run a survey experiment on a sample of Indian respondents. All subjects learn about an HIV/AIDS program; treated subjects learn that it was foreign-funded. We find null results that, along with existing results in the literature obtained from observational data, call into question the view that foreign-funded service delivery interferes with the development of a fiscal contract between the state and its citizens.